Chapter 6 – Legal Issues for the Entrepreneurs

Business Law Wide range of decisions and issues for the entrepreneur to consider Wide range of decisions and issues for the entrepreneur to consider Typically underrated and underestimated by entrepreneurs Typically underrated and underestimated by entrepreneurs None of them can be glossed over None of them can be glossed over Issues increase in importance and complexity as a new venture grows Issues increase in importance and complexity as a new venture grows

Basic Legal Issues to Consider Identifying and engaging good legal help Identifying and engaging good legal help Cost-effectivenessCost-effectiveness Attorney-client confidentialityAttorney-client confidentiality Employment and Employee agreements Employment and Employee agreements Employment restrictionsEmployment restrictions Post-employment restrictionsPost-employment restrictions Trade secrets, invention assignments, copyrights, etcTrade secrets, invention assignments, copyrights, etc Leaving on good termsLeaving on good terms

Basic Legal Issues to consider Incorporation and Legal Form Incorporation and Legal Form Forms of Business EntityForms of Business Entity Corporations(companies), Partnerships, Limited Liability companies, othersCorporations(companies), Partnerships, Limited Liability companies, others Conducting business in other states, countriesConducting business in other states, countries Licenses, Insurance,etc.Licenses, Insurance,etc. Selecting and protecting a nameSelecting and protecting a name

Basic Legal Issues to consider Structuring Ownership Structuring Ownership “Splitting the pie”“Splitting the pie” Equity, Consideration, VestingEquity, Consideration, Vesting Transfer of sharesTransfer of shares Shareholder voting agreementsShareholder voting agreements Proprietary Information and Inventions, Employment and non-compete agreementsProprietary Information and Inventions, Employment and non-compete agreements

Basic Legal Issues to consider Forming and working with the board Forming and working with the board Having an independent boardHaving an independent board Representation in the boardRepresentation in the board Resonsibilities of the boardResonsibilities of the board Contracts and Leases Contracts and Leases Elements of a contractElements of a contract Oral AgreementsOral Agreements General contract termsGeneral contract terms RemediesRemedies

Basic Legal Issues to consider Sale of goods and services Sale of goods and services Human Resources Human Resources Employees Vs Independent ContractorsEmployees Vs Independent Contractors Employee PrivacyEmployee Privacy Employment Agreement and DisputesEmployment Agreement and Disputes Employment DisputesEmployment Disputes Liability for Employee ActsLiability for Employee Acts Putting it all in practicePutting it all in practice

Basic Legal Issues to consider Operational Liabilities and Insurance Operational Liabilities and Insurance Creditors Rights and Bankruptcy Creditors Rights and Bankruptcy Venture Capital Venture Capital Intellectual Property and Cyberlaw Intellectual Property and Cyberlaw Trade Secrets, Copyrights, Patents, Trademarks, Domain NamesTrade Secrets, Copyrights, Patents, Trademarks, Domain Names Licensing Agreements and other transfers of intellectual propertyLicensing Agreements and other transfers of intellectual property

Basic Legal Issues to consider Going Global Going Global Tax PlanningTax Planning Selecting from Representative Office, Branch and SubsidiarySelecting from Representative Office, Branch and Subsidiary Establishing a Legal PresenceEstablishing a Legal Presence Hiring and Employment OverseasHiring and Employment Overseas Distributors, Value-added Resellers, and Sales AgentsDistributors, Value-added Resellers, and Sales Agents Intellectual Property, Funding, OperationsIntellectual Property, Funding, Operations

Basic Legal Issues to consider Buying and selling a business Buying and selling a business M&AM&A IPOIPO Forms of Business CombinationsForms of Business Combinations Stock Purchase and SaleStock Purchase and Sale Pricing Issue and forms of considerationPricing Issue and forms of consideration Tax treatmentTax treatment Shareholder Approval, Due Diligence, Board Approval, Fiduciary DutiesShareholder Approval, Due Diligence, Board Approval, Fiduciary Duties

Basic Legal Issues to consider Going Public Going Public IPO processIPO process RestrictionsRestrictions ProspectusProspectus Misstatements and LiabilityMisstatements and Liability Insider tradingInsider trading Post-IPO disclosures, Communications with Analysts, RegulationPost-IPO disclosures, Communications with Analysts, Regulation

Intellectual Property IP includes patents, trademarks, copyrights, and trade secrets represents important assets to the entrepreneur. IP includes patents, trademarks, copyrights, and trade secrets represents important assets to the entrepreneur.

What is a Patent? A Patent is a contract between the government and an inventor A Patent is a contract between the government and an inventor Govt. grants the inventor exclusivity regarding the invention for a specific time Govt. grants the inventor exclusivity regarding the invention for a specific time It is “Property” right to exclude others It is “Property” right to exclude others It is “Territorial” provides protection only within the United States. No World Wide Patent. It is “Territorial” provides protection only within the United States. No World Wide Patent. The patentee must enforce the patent once it is granted The patentee must enforce the patent once it is granted

Provisional Applications Utility20 years Term (from filling) Utility20 years Term (from filling) Design14 years Term (from filling) Design14 years Term (from filling) Plant20 years Term (from filling) Plant20 years Term (from filling)

Utility Patents It grants the owner protection from anyone else making using and selling the identified invention and generally reflects protection of new, useful, and unobvious process such as film developing, machines such as photocopier, composition of matter such as chemical compound or mixture of ingredients and articles of manufacture such as toothpaste pump It grants the owner protection from anyone else making using and selling the identified invention and generally reflects protection of new, useful, and unobvious process such as film developing, machines such as photocopier, composition of matter such as chemical compound or mixture of ingredients and articles of manufacture such as toothpaste pump

Design Patent It covers new original ornamental and unobvious designs for articles of manufacture, a design patent reflects the appearance of an object. It covers new original ornamental and unobvious designs for articles of manufacture, a design patent reflects the appearance of an object.

Plant Patent These are issued under the same provisions as utility patents and are for new varieties of plants. These patents represent a limit area of interest, and thus very few of these types of patents are issued These are issued under the same provisions as utility patents and are for new varieties of plants. These patents represent a limit area of interest, and thus very few of these types of patents are issued

Trademarks A trademark may be a word, symbol, design, or some combination of such, or it could be a slogan or even a particular sound that identifies the source or sponsorship or certain goods or services. A trademark may be a word, symbol, design, or some combination of such, or it could be a slogan or even a particular sound that identifies the source or sponsorship or certain goods or services. TM is given an initially 20 year registration with 20 years un- renewable terms TM is given an initially 20 year registration with 20 years un- renewable terms

Copyrights A copyright protects original works of authorship. The protection in a copyright doesn't protect the idea itself. A copyright protects original works of authorship. The protection in a copyright doesn't protect the idea itself. It allows someone else to use the idea or concept in a different manner It allows someone else to use the idea or concept in a different manner